TPP finally agreed, China omitted

The US, Japan and ten other Pacific Rim nations agreed to the largest trade agreement in two decades in Atlanta yesterday. The Trans-Pacific Partnership (TPP) covers 40% of the global economy and 800mn people. 

The stated goal of the agreement is to enhance trade and investment among the TPP partner countries, to promote innovation, economic growth and development, and to support the creation and retention of jobs, notes Commerzbank. 

Essentially, the economic bloc aims to 1) reduce trade barriers ranging from trade in dairy products, agriculture, and textiles; 2) establish a common standard for intellectual property; and 3) enforce new standards and laws for investment, the environment and labour.

The deal will still need to be ratified by lawmakers in each country but after five long years of negotiations, the hard work is seemingly done. The other ten countries in the bloc include Australia, New Zealand, Canada, Mexico, Chile, Peru, Singapore, Malaysia, Brunei, and Vietnam. 

In terms of implications, Commerzbank sees the following situations:

• 1) it is major strategic and political coup for both President Obama and Prime Minister Abe. This is in terms of the Obama Administration's 'pivot to Asia' strategy and PM Abe's Third Arrow or efforts to push through reforms, particularly in the agriculture sector.
  
  
• 2) China was excluded from the talks. China is pursuing its own regional trade initiative via the Regional Comprehensive Economic Partnership (RCEP) that involves ASEAN, Australia, New Zealand, India, Japan, and South Korea.